Real estate looks easy to the casual observer, but experienced professionals know there are many potential bumps on the road to closing that can derail a deal.
Here are a few of them:
Inspection Issues
Most homes are sold subject to satisfactory results of a home inspection.
Inspections can reveal many issues, including moisture (even mold) in the crawlspace/attic, HVAC systems needing servicing/repairs, leaking plumbing, dry rot, etc.
If buyer and seller cannot agree on resolving those issues, the transaction will collapse.
Appraisals
Most home sales include mortgage financing and lenders require that the home appraise for at least the sales price.
If the home appraises for less than the sales price, the buyer will have to make up the difference, and/or the seller will have to reduce his price, or the transaction will collapse.
Rising Interest Rates
Many buyers think they are immune to rising interest rates because rates have remained at historic lows for so long, but rates fluctuate daily (even hourly!) and they can rise without warning.
Buyers who are rate-sensitive and have not locked their loan can withdraw or fail to qualify, thereby causing a transaction to fail.
Buyers Changing Mind
This phenomenon is called “buyer’s remorse” and it happens when buyers encounter obstacles such as fear, inability to raise the money required to close, marital discord (aka “arguments”), and OPO (“other peoples’ opinions”), any of which can cause the transaction to collapse.
Loan Not Approved
Amazing as it sounds, some (many?) buyers make offers on homes without having an approved loan.
Those buyers go out and look at homes without having even contacted a lender, or they may only have a “pre-qual letter”, which means a lender has spoken with them and said “congratulations, we would like to give you a loan!” without having qualified the buyer.
If the buyer can’t get a loan, bye-bye transaction!
Long Escrows
Long escrows are the kiss of death for both buyer and seller.
Much can happen during a long escrow, including changed minds (buyer or seller), loss of job, filing for divorce, tax liens getting filed, etc.
If it’s worth doing, it’s worth doing quickly.
February 2nd, 2010 Posted in Inside Real Estate | 
Print
| 2 Comments »
